Gazprom LNG Venture to Target Asia

OAO Gazprom signed a deal Thursday to form a joint venture with Russia’s leading independent gas producer, OAO Novatek, to produce liquefied natural gas for Asia, as it accelerates a push to decrease its dependence on Europe.

The project on the remote Yamal peninsula in Russia’s Arctic could produce 16.5 million metric tons of liquefied natural gas, or LNG, a year and help the state-controlled firm find new customers as it tries to reorient its strategy amid falling demand and regulatory pressure in Europe.

“Considering Gazprom’s resource base, we can speak of a doubling of LNG production on Yamal,” said Gazprom Chief Executive Alexei Miller, referring the LNG project Novatek is already developing on Yamal with France’s Total SA, FP.FR -0.16% which is expected to launch in 2016 with a planned annual capacity of 16.5 million tons.

The companies didn’t say what share they would each have in the venture. They intend to approve the main parameters of the project, including a timetable for making a final investment decision, by the end of the year, Gazprom said.

Gazprom has been slow to enter the global LNG market. Despite having the world’s largest gas reserves, in 2011 it ranked as only the eighth-largest LNG producer, according to data from BP PLC. Instead, Gazprom has relied on pipeline deliveries of natural gas to Europe and domestic sales to generate the bulk of its revenue.